You are here

Double Down on Your IRAs by Loading Up on Two Tax Years at Once

Submitted by O'Grady Financial Group on January 31st, 2019

2.1.19.

I’m a little tired of double down. I don’t mind double mint, double bubble, double play, or even double trouble. But if I was a Blackjack player, I’d be doubly upset that politics has stolen double down. Just as a tennis player, I feel it’s a double fault that politics has stolen unforced errors to describe a careless or foolish mistake. Leave the unforced errors to Federer and Djokovic.

But here’s the kind of double down I’m in favor of. The IRA double down. It happens every year…the first 3.5 months of the new year. It’s the only time of year you can gang up on your IRA or Roth IRA and put in way more than you’d otherwise be allowed to contribute.

Let’s take a look and break it down. You probably know you’re allowed to contribute to an IRA or Roth IRA up to the tax filing deadline, typically April 15th, for the prior tax year. That means even though we’re living in 2019, we can go back in tax time by making an IRA or Roth contribution that counts for 2018. But you’ve got to do it by April 15th.

And what better time to alive than right now in 2019. That means we can make a 2019 IRA or Roth IRA contribution right now. No need to wait around for next year’s tax time. If you’ve got the cash and IRA contributions are part of your long term plan…don’t double dribble, take the shot.

Here’s what the numbers look like. Combining last year’s maximum with this year’s…that’s $11,500. How about that for a double down. And if you’re married, and your spouse does the same…that’s a double, double down to the tune of $23,000.

Of course, all the usual income requirements, limits and phase out ranges apply. And so does the catch up if you’re age 50 and over…another $1,000 per year…double that for both tax years, you could do another two grand…and now you’re doing the triple double down.

Before you do any of this, consult with your tax advisor and make sure this is applicable to your unique situation…that way you won’t end up doing a double take.